Friday, May 16, 2014

The very idea that some entity should be allowed to swoop in and seize the assets of a company using borrowed money and other forms of financial maneuver is reason #1 why finance capitalism is always a catastrophe. This form of economic thinking is the main difference between business and industry, between Predators and Producers, between the Leisure and Industrial Classes.

Highlighting these differences is the reason why I wrote Elegant Technology and why I work so hard to produce this blog. The idea that a few moneychanging vandals should be able to steal and destroy the work of thousands is so repellant, it is something worth starting violent revolutions to prevent.

In the case of Alstom, their ownership interests extend not only to the geniuses who have allowed the company to make insanely difficult things, but also to the French taxpayers who have supported and paid for these efforts over the years. Certainly, any patriotic Frenchman should feel personally assaulted to see such a national treasure fall into the hands of some well-dressed thieves.

So it is with great delight that I see there are still a few patriotic French who understand the issues and have moved to use government authority to prevent the plunder of Alstom. Apparently, the main economic patriot is named Arnoud Montebourg and if he does indeed save Alstom for France, they should cast a bronze statue of him and find an appropriate spot for it along the Avenue des Champs-Élysées.

French government extends veto power over foreign takeovers

Text by FRANCE 24 2014-05-15

France’s government on Thursday expanded its say over foreign industrial investment in key sectors, which will allow it to intervene on behalf of French energy and transport giant Alstom, currently considering a takeover bid from General Electric.

The new rules, were published in the government's official journal and will come into effect on Friday.

They will cover the key sectors of energy, transport, water, health and telecoms.

"The choice we have made, with the prime minister (François Hollande) is the choice of economic patriotism," Economy Minister Arnaud Montebourg told daily newspaper Le Monde.

"These protective measures on France's strategic interests are a renewal of our powers," he added.

Under the new rules, investments by foreign groups, whether European or not, would be submitted for authorisation to Montebourg.

The minister would then consider certain factors, including the sustainability of the proposal, the infrastructural implications, and the preservation of certain "indispensable skills" and whether the national interest is satisfied.

Permission would then be granted provided that the company meets certain commitments.

There will also be the possibility of an appeal to France's highest administrative court, for companies unhappy with the decision.

The new system will thus extend the strategic state controls already applicable to areas of national defence, such as armaments as well as information technology and gambling.

Protecting key industries

This notion of government permission is central to the French system.

It is not alone in seeking some protection for its key industries.

The Committee on Foreign Investment in the United States is a federal panel that reviews foreign investment projects in the United States as regards implications for "national security".

The situation at French industrial giant Alstom is currently at the fore of the government's industry policy.

When it emerged that talks for Alstom to sell its energy division to General Electric (GE) were at an advanced stage, the French government acted quickly, and with success, to encourage Siemens to outline a counter proposal.

That is an alternative strongly favoured by Montebourg, who is an outspoken defender of national patriotism towards French businesses.

The board of Alstom has said that it will decide by the end of May which of the two offers it prefers, although it has already signalled that it prefers the GE offer of 12.35 billion euros ($17.0 billion) for its energy activities.

The GE offer is the only firm proposal so far.

However France's Energy Minister Ségolène Royal on Wednesday came out in favour of a takeover offer for Alstom's energy division by General Electric, in defiance of Montebourg.

She also asked the question, "Why do we want systematically to make foreign investment go away?" more

This is from the Guardian. Note the puzzlement they show for French economic thought. This attitude pretty much explains why the Brits no longer make anything anyone wants to buy.

France gives itself new takeover rights

French government can block foreign takeovers in 'strategic' industries threatening US group General Electric's plans to bid for French assets

Reuters theguardian.com, 15 May 2014

The French government has given itself a new power to block any foreign takeovers of French companies in "strategic" industries.

A decree, published in the official state gazette on Thursday will allow the state to block foreign takeovers in the energy, water, transport, telecoms and health sectors. Any such acquisition will now need the approval of the economy minister.

The new decree could be an obstacle to US group General Electric's planned $16.9bn bid for the energy assets of French industrial group Alstom .

The government had not previously given any hint it was considering such a measure, although economy and industry minister Arnaud Montebourg has openly criticised the Alstom-GE proposal and instead advocated a European tie-up with Germany's Siemens .

Cash-strapped Alstom, which also builds France's high-speed trains, was bailed out by the French government a decade ago and is seen by many in France as an embodiment of the country's engineering prowess.

A source close to Montebourg said the veto will not necessarily be used, but is aimed at giving France a seat at the table.

The powers granted are similar to those that already exists in other European countries and in the US, where the president has powers to block certain deals. more